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BOOKKEEPING and Financial Services Accurate & Reliable Professional Bookkeeping Services, on or off site QuickBooks Pro set-up & data clean-up optimized for your business Business Plans & Financing Assistance Selling Your Business Intermediary Services (647) 230-8749 info@baselinebusiness.ca ? ? ! ? ? o ? } ? ? ? A ? ? ? ? A ? ? b ? ? ? ? \ A ? / o ? o A ? \ ? 0 ? ? f ? ? } A ? ? ? o ? ? ? ? A ? ? ? ? A ? $ ? A ? ! o f ? \ A ? ? ? ? } ? ? ? o \ ? ? ? o ? ? } ? ? \ ? ? ? ? ? ? ? A ? f - ? o ? A ? ? ? o ? A \ ? ? A ? ? ? ? ? ? - ? ? ? R o ? ? ? \ ? ? f ? \ ? o f ? ? ? ? ? ? A ? o A ? < ? ? ? A ? R o o ? ? ? ? R ? o ? } ? ? ? ? A ? o A ? ? ? } ? ? o } ? ? ? ? ? ? ? ? b ? o A ? ? o A ? ? ? t ? o A ? ? ? } A ? o A ? f f ? A ? ? ? ? o f ? ? ? ? ? ? o ? ? o ? \ o f ? ? ? ? ? ? ? ? ? } - } ? ? A ? ? o A ? ? ? ? ? ? ? ? ? ? o ? ? ? ? ? 9 ? A ? ? A c ? A ? ? ? ? ? o ? ? ? ? A } ? ? ? ? o ? A ? ? ? ? ? ? ? ? ? ? A ? o ? A ? ? ? ? ? ? ? ? ? ? ? ? ? ? o ? A ? o } o ? A ? o ? A ? ? ? o ? } ? ? 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For More Information Call: 21 Thursday , N ovem ber 25, 2010 O A KVILLE BEA V ER w w w .o akvillebeaver .co m BusinessOakville Beaver An Investment Policy Statement (IPS)is an invaluable tool for any investor.Regardless of whether your invest- ment objectives are short-, medium- or long-term, an IPS will help keep you on track toward your end destination. An IPS is simply a document, which out- lines what you are trying to accomplish in a given investment account along with details about your ability and willingness to accept risk (which are not necessarily the same). The IPS specifies the allowable propor- tions of stocks and bonds in your portfolio and may provide other specific parameters such as target returns, when to rebalance, where cash flow will come from, tax con- straints and limits on geographic diversifica- tion or company size. The reality of investing for most people is that there usually is no specific written strat- egy. You invest in a series of good invest- ments as they come along without regard to why and how you are investing. People too often fly by the seat of their pants when it comes to their most important financial decisions. If you were going to build your dream home would you take the same approach? Of course not. You hire an architect who draws up the plans according to your housing desires. The plans are submitted to the town so its experts can double check to see if the plans are done correctly. Both your architect and the Town staff are making sure your dream will not col- lapse in a storm. The roof construction must be water proof. The insulation must be sufficient oth- erwise you might waste several hundreds of dollars every year on heating bills. Throughout the construction process you have well-qualified professionals helping you achieve your housing objectives. A similar thoughtful approach should be taken when it comes to your investment portfolio. Your objectives along with other relevant details mentioned earlier will determine what your IPS looks like. There are a lot of details which need to be worked out behind the scenes in order for that IPS to be effective. For example, if you are planning for retirement you should have a target retire- ment nest egg. How much money do you need in order to retire comfortably?How many years until retirement? What do you have to save every year to reach your target? What rate of return is needed for you to achieve your retirement objectives? Then you will be in a position to decide your asset allocation between stocks and bonds. Many people will have difficulty putting this type of document together. This is where your investment advisor can be of great assistance. Once the IPS is in place and has been implemented, the work is not done. It is important to regularly examine your cur- rent position compared to your target. If things are on track perhaps no changes are required, but if things go off the rails like a job loss or a serious medical issue, the IPS will likely need to be modified. Maybe the single greatest benefit of the IPS is that it can help keep you from making knee-jerk decision, which can cause more harm than good. Consider the IPS to be your road map. When you are panicked about the stock market declines, your IPS will keep you on track. Stocks are meant to be a long-term investment to provide growth and that volatility is expected. If something has happened that necessi- tates a change to your IPS and subsequently your investments, that change will come about due to logical, considered thought rather than a fear-based reaction to tempo- rary events. It is in those times that an IPS is worth far more than its weight in gold. Yes there is uncertainty in investing. Yes there is risk. These risks are out of your con- trol. That is just the reality of investing. But it is well within your control is to have a well-thought-out IPS. An Investment Policy Statement can help you achieve your financial goals. Submitted by Peter Watson, MBA, CFP, R.F.P., CIM, FCSI. In 1991 Peter founded Peter Watson Investments in Oakville and now is with Industrial Alliance Securities Inc. Peter can be reached at 905-842-2100. Investment policy statement is roadmap to financial success Dollars & Sense By Peter Watson